However, 63 per cent of the 2,532 people questioned admitted being worried about not having enough money in retirement.

The disparity between people’s concerns over retirement and their absence of financial planning suggests that inertia or lack of awareness are hindering people’s chances of securing a decent pension.

When asked about what decisions they would make on retirement, seven per cent of people said they would take most of the money to spend on cars or holidays; six per cent would said they would re-invest their cash and five per cent would still buy an annuity.

Nick Elphick, managing director of AXA Wealth, said it was crucial that people were fully informed about how they could fund their retirement.

If pensions literacy is not improved, and the free financial advice pledged by the Chancellor is diluted or cannot be delivered on time, many people will not have sufficient means to support themselves during retirement

Nick Elphick, AXA Wealth

He said: “While the pension changes in the Budget constituted the biggest reform of pensions in 100 years, it is alarming to discover the low levels of understanding and knowledge.

“With the end of compulsory annuitisation, the flood gates have been opened to a whole new raft of at-retirement possibilities.

“The problem of a lack of knowledge around investment and savings options is likely to worsen with the array of new pension investment and savings products likely to enter the market when the proposed pension reforms come into force in April 2015.

“If pensions literacy is not improved, and the free financial advice pledged by the Chancellor is diluted or cannot be delivered on time, many people will not have sufficient means to support themselves during retirement.”

Mr Osborne promised savers free face-to-face guidance on retirement to help them tackle what will be one of their biggest financial decisions.

But both the Association of British Insurers and the National Association of Pension Funds have warned that the guidance for up to 400,000 savers a year would be at “significant risk” unless decisions were urgently made over who will pay to provide advisers.